Chrysler offers $5,750 in bonuses, payments to UAW workers
Pact includes new models for plants in Illinois and Michigan, $1.3 billion for Indiana transmission operations
Photo credit: BLOOMBERG
DETROIT -- UAW workers at Chrysler Group will receive at least $5,750 in bonus and other payments under a tentative labor agreement reached today.
The amount could be higher if Chrysler -- the smallest and weakest of Detroit's 3 automakers -- meets certain financial targets and manufacturing benchmarks in the future.
The deal includes a $3,500 signing bonus, with half to be paid upfront and the remaining half to be paid at a later time when Chrysler achieves financial stability, according to a summary of the agreement released by the union. The financial metrics will be set later by Chrysler following a review with the UAW, the union said.
The UAW said the agreement includes $4.5 billion of investment to produce "new models and upgraded vehicles and components by 2015, all of which will be invested directly into retooling and upgrading plants."
Chrysler, which hasn't posted an annual profit since 2005, expects to earn up to $500 million in net income this year -- well below GM and Ford.
The UAW said Chrysler will create 2,100 new jobs as a result of the plant investments for new products. (See below)
"It was a jobs, jobs, jobs agenda," said General Holiefield, the UAW's vice president in charge of Chrysler bargaining. "We placed more focus on that than on pretty much anything else."
The deal covering wages and benefits for 23,000 Chrysler hourly workers came eight days after the union reached a tentative agreement with Ford Motor Co.
UAW workers at Chrysler will also receive a performance bonus of $500 each year and a $500 annual quality bonus.
The union said the accord also provides up to $1,000 in annual bonuses for achieving "world class manufacturing metrics." Those metrics will be established in later discussions between the company and the union, the UAW said.
The union also negotiated an enhanced profit-sharing plan, with 10 percent of payouts earmarked to fund a retiree health care plan. Profit-sharing payments will be based on 85 percent of Chrysler's global modified operating profit before any interest and special charges, the union said.
The plan to divert a portion of any profit-sharing payments to the health care fund is subject to review and approval by federal regulators.
The union said all new workers will be paid entry-level wages, which will immediately increase from $14 an hour now to $15.78 an hour under the new deal. Wages for new and existing Tier 2 workers will also steadily increase to $19.28 an hour over the life of the deal.
In addition to higher wages, the contract provides new benefits for Chrysler's new hires, or Tier 2 workers. Chrysler, with 5,000 Tier 2 workers earning lower wages, has no limit on how many people it can hire at the lower Tier 2 wage.
But at the end of the new contract, the company agreed to cap the percentage of hourly workers under the tier-two wage at 25 percent.
"At that time, all workers in excess of the 25 percent cap will be begin receiving the same wages as traditional Chrysler workers," the UAW contract summary says.
The deal also reinstates tuition assistance for hourly workers and eliminates the union's legal services plan after Dec. 31, 2013.
Chrysler declined comment until union members ratify the contract. During the talks, Chrysler CEO Sergio Marchionne maintained the automaker could not afford a deal that raises its hourly labor costs.
Chrysler's hourly labor costs -- estimated at $49 for wages and benefits -- are the lowest among Detroit's automakers but on par with what non-union Hyundai Motor Co. pays its U.S. workers.
The new UAW pacts at GM and Ford are expected to raise their annual labor costs by 1 percent or less.
Product, plant details
Chrysler plants, product commitments and investment plans included in the pact:
Belvidere, Ill., assembly plant: Estimated plant investment of about $600 million with 2,400 jobs retained. The plant will continue production of the current Dodge Caliber, Jeep Patriot and Jeep Compass through their life-cycles. The plant also will get a new small vehicle.
Sterling Heights, Mich.: Estimated plant investment of about $850 million with about 2,200 jobs retained. The plant will continue production of the Dodge Avenger, Chrysler 200 and Chrysler 200 convertible through their current lifecycles. A new compact car vehicle will be produced, probably the Giulia, according to sources.
Kokomo, Ind., area plants: Estimated plant investment of about $1.3 billion with about 3,500 jobs retained. The transmission plants will continue output of existing products through planned lifecycles, along with a pair of new transmissions -- a 9-speed and an 8-speed automatic.
GEMA engine plant in Dundee, Mich.: Estimated plant investment of about $300 million with about 350 jobs retained.
Toledo, Ohio, machining plant: Estimated plant investment of about $100 million with about 550 jobs retained.
Trenton, Mich., North engine plant: Estimated plant investment of about $100 million and 250 new jobs created.
Additional investment: The company plans to invest another $1.3 billion across multiple manufacturing facilities. This investment will retain about 1,000 jobs and may add up to an additional 1,850 new jobs.
The UAW said it is "mutually understood" that the product, investment and employment levels detailed in the agreement are "contingent upon consumer demand generating sustainable and profitable volumes."
"This tentative agreement builds on the momentum of job creation and our efforts to rebuild America by adding 2,100 new jobs by the end of the agreement in 2015 to communities left in turmoil in the wake of the country's economic collapse." UAW President Bob King said in the statement.
Chrysler is the last Detroit automaker to secure a new labor accord. General Motors Co. workers ratified a new four-year contract on Sept 28. Ford workers are currently voting on their deal.
Under the Ford deal, workers will receive at least $16,700 over the life of their contract, including a $6,000 signing bonus, annual lump sums of $1,500 and profit-sharing payments. At GM, the deal included a signing bonus of $5,000 and $1,000 annual lump sum payments in lieu of cost-of-living adjustments.
The union – battered by the recession and restructurings at GM and Chrysler – made job creation a top priority during the talks.
Ford pledged to create 5,750 new jobs by 2015 and invest $6.2 billion in its U.S. plants. GM promised to add 6,400 and invest $2.5 billion in its U.S. factories. It will also reopen an idled assembly plant in Tennessee.
Luca Ciferri, David Bakholz and Philip Nussel contributed to this report.
PRESS RELEASE: UAW and Chrysler reach tentative agreement: New Jobs, A New Day: Rebuilding America
DETROIT – Just eight days after reaching a tentative agreement with Ford Motor Co., the UAW reached a tentative agreement with Chrysler Group LLC today, completing its third agreement with domestic automakers in a month.
"Less than three years ago, Chrysler was teetering on the edge of bankruptcy as our nation was thrown into the worst economic crisis since the Great Depression," said UAW President Bob King. "This tentative agreement builds on the momentum of job creation and our efforts to rebuild America by adding 2,100 new jobs by the end of the agreement in 2015 to communities left in turmoil in the wake of the country's economic collapse." King added.
"This tentative agreement, coupled with the new agreements at General Motors and Ford bring more than 20,000 new jobs to communities across America," said King. "Together with the jobs created in suppliers and other businesses supported by auto manufacturing, a total of 180,000 jobs will be added to the country's battered economy. Through collective bargaining and working together with the domestic automakers, we have shown that cooperation and collective bargaining work," King added.
The UAW Chrysler proposed agreement also includes $4.5 billion of investment to produce new models and upgraded vehicles and components by 2015, all of which will be invested directly into retooling and upgrading plants.
"This agreement is the latest in a remarkable turnaround for Chrysler," said UAW Vice President General Holiefield, who directs the union's Chrysler Department. "The company declared bankruptcy just a few years ago and with great sacrifice by UAW Chrysler workers and with federal loans and support from the Obama Administration, Chrysler has paid back the loans in full. Today, thanks to the dedication of its UAW workers, Chrysler is showing strong sales and adding new cars to its line-up, additional shifts at plants, and creating new jobs. Chrysler has turned the corner and with this agreement will continue to move forward. It's a new day at Chrysler," Holiefield added.
The Chrysler loans from the U.S. Government were paid in full, six years before they were due. The loans provided the foundation for the company's turnaround, and its ability to now give its workers what they deserve.
The UAW reached a tentative agreement with GM on Sept. 16 and with Ford on Oct 4. The GM agreement was ratified by UAW members with a 2:1 ratio on Sept. 28. The Ford agreement is pending ratification by UAW members. Voting at Ford will be completed by Oct. 18.
The UAW represents 26,000 employees at Chrysler, including 3,000 salaried employees at 48 Chrysler facilities in the United States, making vehicles and components with the Chrysler, Jeep, Dodge, Mopar and Ram Truck brands.
You can reach David Phillips at email@example.com.